Financial Performance Representations 2019-2022

ITEM 19

FINANCIAL PERFORMANCE REPRESENTATIONS

The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.

 

2021 Gross Sales Data

As of December 31, 2021, there were 68 Pancheros restaurants (42 franchised restaurants and 26 affiliate-owned restaurants) in operation for the calendar year 2021.

2021 Gross Sales1 of all 68 restaurants

in operation for the full calendar year 2021:

Average Median High Low
All 66 Restaurants $1,356,8166 $1,211,9566 $3,220,292 $636,377
42 Franchised Restaurants $1,364,9077 $1,182,5157 $3,220,292 $636,377
26 Affiliate-Owned Restaurants $1,344,8408 $1,260,5678 $2,146,953 $753,685

Note 1. These financial performance figures do not reflect royalty fees, advertising find contributions, operating expenses, or other costs or expenses that must be deducted from gross sales to obtain your net income or profit. “Gross Sales” has the same meaning as Gross Revenues which is all revenue derived from the operation of the Franchised Restaurant, including sales revenue derived from off-premises sales, whether received in cash, in services in kind, from barter and/or exchange, on credit (whether or not payment is received) or otherwise, less any sales tax or other taxes collected from your customers if paid to the appropriate taxing authority. Gross Sales also does not include the amount of any documented refunds and credits given in good faith to customers (but only If the original amounts were included in Gross Sales). All barter and/or exchange transactions for which you furnish services and/or products in exchange for goods or services to be provided to you by a vendor, supplier or customer will, for the purpose of determining Gross Sales be valued at the full retail value of the goods and/or services provided to you.

Note 2: 15 (36%) franchised restaurants and 10 (38%) affiliate-owned restaurants met or exceeded this average; 19 (45%) franchised restaurants and 15 (58%) affiliate-owned restaurants met or exceeded this median

Note 3: 15 (36%) franchised restaurants met or exceeded this average and 21 (50%) of franchised restaurants met or exceeded this median

Note 4: 10 (38%) affiliate-owned restaurants met or exceeded this average and 13 (50%) affiliate-owned restaurants met or exceeded this median

As of  December 31, 2021, there were 62 Pancheros restaurants (37 franchised restaurants and 25 affiliate-owned restaurants) in operation for the three calendar years 2019 to 2021.

 

2021 Gross Sales5 of all 62 restaurants in operation

for three full calendar years from 2019 to 2021:

Average Median High Low
All 62 Resturants $1,356,8166 $1,211,9566 $3,220,292 $636,377
37 Franchised Restaurants $1,364,9077 $1,182,5157 $3,220,292 $636,377
25 Affiliate-Owned Restaurants $1,344,8408 $1,260,5678 $2,146,953 $735,685

Note 5: These financial performance figures do not reflect royalty fees, advertising fund contributions, operating expenses, or other costs or expenses that must be deducted from gross sales to obtain your net income or profit. “Gross Sales” has the same meaning as Gross Revenues which is all revenue derived from the operation of the Franchised Restaurant, including sales revenue derived from off-premises sales, whether received in cash, in services in kind, from barter and/or exchange, on credit (whether or not payment is received) or otherwise, less any sales tax or other taxes collected from your customers if paid to the appropriate taxing authority. Gross Sales also does not include the amount of any documented refunds and credits given in good faith to customers (but only if the original amounts were included in Gross Sales). All barter and/or exchange transactions for which you furnish services and/or products in exchange for goods or services to be provided to you by a vendor, supplier or customer will, for the purpose of determining Gross Sales be valued at the full retail value of the goods and/or services provided to you.

Note 6: 14 (38%) franchised restaurants and 9 (36%) affiliate-owned restaurants met or exceeded this average; 17 (46%) franchised restaurants and 14 (56%) affiliate-owned restaurants met or exceeded this median.

Note 7: 14 (38%) franchised restaurants met or exceeded this average and 19 (51%) of franchised restaurants met or exceeded this median.

Note 8: 9 (36%) affiliate-owned restaurants met or exceeded this average and 13 (52%) affiliate-owned restaurants met or exceeded this median.

 

2020 Gross Sales Data

As of December 31, 2020, there were 66 Pancheros restaurants (41 franchised restaurants and 25 affiliate-owned restaurants) in operation for the full calendar year 2020.

 

2020 Gross Sales1 of all 66 restaurants

in operation for the full calendar year 2020:

Average Median High Low
All 66 Resturants $1,141,5052 $1,064,8162 $2,698,860 $260,447
41 Franchised Restaurants $1,047,7623 $901,6943 $2,698,860 $260,447
25 Affiliate-Owned Restaurants $1,295,2444 $1,242,3274 $2,256,024 $613,648

Note 1. These financial performance figures do not reflect royalty fees, advertising fund contributions, operating expenses, or other costs or expenses that must be deducted from gross sales to obtain your net income or profit. “Gross Sales” has the same meaning as Gross Revenues which is all revenue derived from the operation of the Franchised Restaurant, including sales revenue derived from off-premises sales, whether received in cash, in services in kind, from barter and/or exchange, on credit (whether or not payment is received) or otherwise, less any sales tax or other taxes collected from your customers if paid to the appropriate taxing authority. Gross Sales also does not include the amount of any documented refunds and credits given in good faith to customers (but only if the original amounts were included in Gross Sales). All barter and/or exchange transactions for which you furnish services and/or products in exchange for goods or services to be provided to you by a vendor, supplier or customer will, for the purpose of determining Gross Sales be valued at the full retail value of the goods and/or services provided to you.

Note 2: 12 (29%) franchised restaurants and 16 (64%) affiliate-owned restaurants met or exceeded this average; 15 (37%) franchised restaurants and 18 (72%) affiliate-owned restaurants met or exceeded this median.

Note 3: 16 (39%) franchised restaurants met or exceeded this average and 21 (51%) of franchised restaurants met or exceeded this median

Note 4: 10 (40%) affiliate-owned restaurants met or exceeded this average and 13 (52%) affiliate-owned restaurants met or exceeded this median.

As of December 31, 2020, there were 60 Pancheros restaurants (37 franchised restaurants and 23 affiliate- owned restaurants) in operation for the MI three calendar years 2018 to 2020.

2020 Gross Sales5 of all 60 restaurants

in operation for three full calendar years from 2018 to 2020:

Average Median High Low
All 60 Resturants $1,173,4926 $1,077,7366 $2,698,860 $421,373
37 Franchised Restaurants $1,089,2727 $927,4767 $2,698,860 $421,373
23 Affiliate-Owned Restaurants $1,308,9768 $1,245,7648 $2,097,627 $529,761

Note 5: These financial performance figures do not reflect royalty fees, advertising fund contributions, operating expenses, or other costs or expenses that must be deducted from gross sales to obtain your net income or profit. “Gross Sales” has the same meaning as Gross Revenues which is all revenue derived from the operation of the Franchised Restaurant, including sales revenue derived from off-premises sales, whether received in cash, in services in kind, from barter and/or exchange, on credit (whether or not payment is received) or otherwise, less any sales tax or other taxes collected from your customers if paid to the appropriate taxing authority. Gross Sales also does not include the amount of any documented refunds and credits given in good faith to customers (but only if the original amounts were included in Gross Sales). All barter and/or exchange transactions for which you furnish services and/or products in exchange for goods or services to be provided to you by a vendor, supplier or customer will, for the purpose of determining Gross Sales be valued at the full retail value of the goods and/or services provided to you.

Note 6: 11 (30%) franchised restaurants and 14 (61%) affiliate-owned restaurants met or exceeded this average; 13 (35%) franchised restaurants and 17 (74%) affiliate-owned restaurants met or exceeded this median.

Note 7: 13 (35%) franchised restaurants met or exceeded this average and 19 (51%) of franchised restaurants met or exceeded this median.

Note 8: 10 (43%) affi1iate•owned restaurants met or exceeded this average and 12 (52%) affiliate-owned restaurants met or exceeded this median.

 

2019 Gross Sales Data

As of December 31, 2019, there were 66 Pancheros restaurants (38 franchised restaurants and 28 affiliate-owned restaurants) in operation for the full calendar year 2019.

2019 Gross Sales(9) of all 66 restaurants

in operation for the full calendar year 2020:

Average Median High Low
All 66 Resturants $1,133,25510 $979,49810 $2,591,281 $421,279
38 Franchised Restaurants $1,035,71911 $906,15411 $2,591,281 $421,279
28 Affiliate-Owned Restaurants $1,265,62612 $1,291,06112 $2,097,627 $529,761

Note 9: This financial performance argues do not redirect royalty fees, advertising fund contributions, operating expenses, or other costs or expenses that must be deducted from gross sales to obtain your net income or profit. “Gross Sales” has the same meaning as Gross Revenues which is all revenue derived

from the operation of the Franchised Restaurant, including sales revenue derived from off-premises sales, whether received in cash, in services in kind, from barter and/or exchange, on credit (whether or not payment is received) or otherwise, less any sales tax or other taxes collected from your customers if paid to the appropriate taxing authority. Gross Sales also does not include the amount of any documented refunds and credits given in good faith to customers (but only if the original amounts were included in Gross Sales). All barter and/or exchange transactions for which you furnish services and/or products in exchange for goods or services to be provided to you by a vendor, supplier or customer will, for the purpose of determining Gross Sales be valued at the full retail value of the goods and/or services provided to you.

Note 10: 10 (26%) franchised restaurants and 17 (61%) affiliate-owned restaurants met or exceeded this average; 14 (37%) franchised restaurants and 19 (68%) affiliate-owned restaurants met or exceeded this median.

Note 11: 12 (32%) franchised restaurants met or exceeded this average and 19 (50%) of franchised restaurants met or exceeded this median.

Note 12: 15 (54%) affiliate-owned restaurants met or exceeded this average and 14 (50%) affiliate-owned restaurants met or exceeded this median.

As of December 31, 2019, there were 57 Pancheros restaurants (32 franchised restaurants and 25 affiliate- owned restaurants) in operation for the MI three calendar years 2017 to 2019.

 

2019 Gross Sales13 of all 57 restaurants

in operation for three full calendar years from 2017 to 2019:

Average Median High Low
All 57 Resturants $1,188,95014 $1,073,77114 $2,591,281 $421,279
32 Franchised Restaurants $1,108,71915 $926,30115 $2,591,281 $421,279
25 Affiliate-Owned Restaurants $1,291,64716 $1,332,71016 $2,097,627 $529,761

Note 13: This financial performance argues do not redirect royalty fees, advertising fund contributions, operating expenses, or other costs or expenses that must be deducted from gross sales to obtain your net income or profit. “Gross Sales” has the same meaning as Gross Revenues which is all revenue derived from the operation of the Franchised Restaurant, including sales revenue derived from off-premises sales, whether received in cash, in services in rind, from barter and/or exchange, on credit (whether or not payment is received) or otherwise, less any sales tan or other taxes collected from your customers if paid to the appropriate taxing authority. Gross Sales also does not include the amount of any documented refunds and credits given in good faith to customers (but only if the original amounts were included in Gross Sales). All barter and/or exchange transactions for which you furnish services and/or products in exchange for goods or services to be provided to you by a vendor, supplier or customer will, for the purpose of determining Gross Sales be valued at the full retail value of the goods and/or services provided to you.

Note 14: 10 (31%) franchised restaurants and 16 (64%) affiliate-owned restaurants met or exceeded this average; 12 (38%) franchised restaurants and 17 (68%) affiliate-owned restaurants met or exceeded this median.

Note 15: 10 (31%) franchised restaurants met or exceeded this average and 16 (64%) of franchised restaurants met or exceeded this median.

Note 16: 14 (56%) affiliate-owned restaurants met or exceeded this average and 13 (52%) affiliate-owned restaurants met or exceeded this median.

 

2021 Food and Paper Costs’

25 Affiliate-Owned PANCHEROS restaurants operating Full 12 Months

The following chart reflects the 2021 food and paper costs for the 26 corporate-owned restaurants that we operate, that were in operation for the full 12 months of 2021. These 26 restaurants use a common back office system and common food cost calculation procedures. There are no franchised restaurants in this group.

Average Low High Median
Food 28.62%2 25.04% 31.99% 28.57%
Paper 3.35%3 2.78% 3.89% 3.34%

Note 1. The above costs do not include labor, rent, utilities, and other costs incurred by affiliate-owned restaurants. Franchised restaurants may incur additional costs that affiliate-owned restaurants do not have, including royalty payments, training expenses, and certain advertising fees.

Note 2. 12 (or 46%) of these 26 restaurants met or exceeded this average.

Note 3. 12 (or 46%) of these 26 restaurants met or exceeded this average.

 

2020 Food and Paper Costs’

25 Affiliate-Owned PANCHEROS restaurants operating Full 12 Months

The following chart reflects the 2020 food and paper costs for the 25 affiliate-owned restaurants that we corporate, that were in operation for the full 12 months of 2020. These 25 restaurants use a common back-office system and common food cost calculation procedures. There are no franchised restaurants in this group.

Average Low High Median
Food 27.26% 23.78% 30.37% 27.52%
Paper 2.93% 2.59% 3.27% 2.96%

Note 1. The above costs do not include labor, rent, utilities, and other costs incurred by affiliate-owned restaurants. Franchised restaurants may incur additional costs that affiliate-owned restaurants do not have, including royalty payments, training expenses, and certain advertising fees.

Note 2. 14 (or 56%) of these 25 restaurants met or exceeded this average.

Note 3. 14  (or 56%) of these 25 restaurants met or exceeded this average.

 

2019 Food and Paper Costs!

28 Affiliate-Owned PANCHEROS restaurants operating Full 12 Months

The following chart reflects the 2019 food and paper costs for the 28 affiliate-owned restaurants that we operate, that were in operation for the full 12 months of 2019. These 28 restaurants use a common back-office system and common food cost calculation procedures. There are no franchised restaurants in this group.

Average Low High Median
Food 25.84% 23.44% 29.72% 25.74%
Paper 3.08% 2.48% 4.05% 2.99%

 

Note 1. The above costs do not include labor, rent, utilities, and other costs incurred by affiliate-owned restaurants. Franchised restaurants may incur additional costs that affiliate-owned restaurants do not have, including royalty payments, training expenses, and certain advertising fees.

Note 2. 14 (or 50%) of these 28 restaurants met or exceeded this average.

Note 3. 11 (or 39%) of these 28 restaurants met or exceeded this average.

Some restaurants have sold these amounts. Your individual results may differ. There is no assurance that you will sell as much.

Written substantiation for the financial performance representation will be made available to you upon reasonable request.

Except for the information presented above, we do not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor’s management by contacting Rodney Anderson, 2475 Coral Ct., Suite B, Coralville, Iowa 52241 (319) 545-6565, the Federal Trade Commission, and the appropriate state regulatory state agencies.

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